EMISSIONS: EU Mid-Day Carbon Summary: EUA-UKA Spread Narrows to December Low
Dec-31 12:07
The EUA Dec26-UKA Dec26 spread is narrowing on Wednesday to a December low, with stronger gains in the UK market amid continued bullish sentiment, while CBAM is still expected to be implemented on 1 January.
- EUA DEC 26 unchanged at 87.28 EUR/t CO2e
- EUA DEC 27 down 0% at 89.89 EUR/t CO2e
- TTF Gas FEB 26 up 1.7% at 27.99 EUR/MWh
- UKA DEC 26 up 0.45% at 67.29 GBP/t CO2e
- UKA DEC 27 up 0.5% at 70.31 GBP/t CO2e
- NBP Gas FEB 26 up 1.9% at 73.43 GBp/therm
- European gas prices edge higher on Wednesday with strong supply weighed against colder weather.
- Investment funds increased net long positions in EU ETS futures on the ICE exchange slightly declined from their all-time high in the previous week.
- Investment funds raised net long positions in UK ETS futures on the ICE exchange edged down slightly, while Firms reduced their short bets.
- Investment Funds' net short positioning in ICE German power was unchanged on the week , while Investment Firms increased their net long position.
- Spain has allocated €818mn to 126 large-scale energy storage projects, which will add 2.2GW of power and 9.4GWh of storage capacity nationwide.
- Finland’s 890MW Olkiluoto 2 nuke will be curtailed by 155MW over 2 January-6 April 2026 due to unplanned works at the plant.
- The 585MW Heysham 12 in the UK has extended works to 13 January 2026 from 10 January, with works at the 660MW Hesham 28 planned over 6-22 January.
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US TSYS: Bear Steeper On Japan Spillover, ISM Mfg Ahead
Dec-01 11:56
Treasuries trade bear steeper overnight primarily in spillover to JGBs under pressure on greater prospects of the BoJ hiking next month. The move also extends treasury losses seen during Friday’s particularly disrupted session with the sustained CME outage and early close.
- Cash yields are 0.5-4bp higher, with increases led by 20s and 30s.
- 5s30s are 109bps is back close to Nov 21 two-month highs that briefly cleared 110bps.
- TYH6 trades at 113-07+ (-04) on reasonable overnight volumes of 310k.
- It has shifted away from last week’s high of 113-22+ (Nov 25 high) in what’s seen as a corrective pullback, with support seen at 113-01 (20-day EMA).
- Data: S&P Global US mfg PMI Nov F (0945ET), ISM Mfg Nov (1000ET)
- Fedspeak: Fed Chair Powell gives brief remarks and is in a panel discussion (2000ET) – text and Q&A but within FOMC blackout and so won’t touch on the economic outlook or monetary policy.
- Bill issuance: US Tsy $86B 13W & $77B 26W bill auctions (1130ET)
- Politics: Trump signs Congressional bills (1600ET)
EGB OPTIONS: Bund ratio Put Spread
Dec-01 11:48
RXG6 128.5/127ps 1x1.5, bought for 32 and 32.5 in 2k.
STIR: Fed 25bp Cut Increasingly Priced For Dec, Trump Has Decided On Fed Pick
Dec-01 11:40
- Fed Funds implied rates are 1bp lower for next month’s meeting, continuing to move closer to fully pricing a rate cut as time goes by without a countering argument, with little change further out.
- Today’s docket is headlined by manufacturing ISM/PMI surveys, with the FOMC now in media blackout.
- Trump yesterday said he has decided on his pick for the next Fed Chair role and that “we’ll be announcing it”. Bloomberg sources last week reiterated NEC’s Hassett as a front-runner and he’s since seen a further boost in betting markets to now 72% on Polymarket vs in the 50s late last week.
- Cumulative cuts from 3.88% effective: 22bp Dec, 28bp Jan, 35.5bp Mar, 43bp Apr and 58.5bp Jun.
- SOFR futures are between -0.01 to +0.005 on, with the terminal implied yield still holding around the 3.00% mark. A reminder that the 2.96% on Nov 25 was its lowest close since days shortly ahead of the hawkish Oct 29 FOMC press conference.
